Can Bitcoin Be Regulated?

One of the great cultural nuances of the internet is how everyone can be right. Providing you are convincing, or at least look the part, most effective dissent will get chucked out the window, along with any need for respect. In point, we have the prototypical messaging of the Bitcoin-promoting community, which often argues that digital currency is beyond government regulation or control due to algorithms and encryption. They have some credibility, but as with all things deemed to “beat the system,” there are major exceptions which must be considered.

To start, the idea that crypto transactions can simply fly under the radar is muddled by known IRS actions. The federal government has already issued warnings to thousands of people about failure to report crypto gains to the IRS, and significant penalties lurk for those who flaunt such warnings. We also have the recent indictment of John McAfee for allegedly hiding cryptocurrency assets. Thus from a reactive standpoint the State is already gearing up for the long haul fight.

Perhaps more immediately, reports suggest the government seized around $1 billion worth of Bitcoin connected to the controversial Silk Road marketplace, whose founder Ross Ulbricht was given a life sentence for numerous alleged crimes. That’s a small but noticeable chunk of the overall coin value, and it’s not the first time Uncle Sam has held a stake. Other governments such as Bulgaria have snapped up digital currency in the past, with the leaders in Sofia holding 200,000 bitcoins at one stage.

Ruling out these sorts of criminal situations, what of the more obvious methods for centralized regulation? Governments could begin requiring trading firms like Coinbase to meet specific standards of licensure and tax reporting, much as investment companies are required to do. They might also go after crypto miners, placing restrictions or taxes on their Morian mainframes These are hardly out of the question when we examine the history of the State, and its insatiable desire for money.

By this I don’t mean to suggest crypto is a bad idea; in fact, I own a great deal and will continue adding. Just avoid becoming too drunk on the swill of lolbertarianism. As Ronny boy might say, “The government wants what it wants.”